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GIVING DEEPER MEANING TO THE TERM "national bank," the U.S. and Europe are racing down the trail marked by such economic leaders as Mexico, Argentina and Russia.

The United Kingdom fired the starting gun last summer with nationalization of Northern Rock, under pressure of a depositors' run. Now financial institutions on both sides of the Atlantic (and in the middle, too -- Iceland) are receiving political capital.

The Fed started last week with a move that seemed radical. It was "considering" purchase of private commercial paper. This would roll over the short-term debt that's the life-blood of the real economy. It would also secure investments of money-market funds, now guaranteed by the government.

But that was not enough. By week's end, the word "radical" had acquired a new definition. The U.S. Treasury admitted that it was "actively considering" purchase of banks' stock, which it hoped might shore up the banks' ability and willingness to lend.

All the world's capitalists have turned to the state for aid. Central bankers and finance ministers are assuming responsibility for every loan and every deposit. And any tactic they might have missed may well be adopted Monday, following the weekend's Washington meeting of the World Bank and International Monetary Fund and a parallel meeting of the G-20 nations.

A Variety of Members

The G-20 includes all the big economic powers, including the rising ones with spare savings, such as China, India, Brazil and South Korea, that could invest in a solution. It also includes some countries with powerful experiences of economic crisis and nationalized banking, such as Argentina, Indonesia, Mexico, Russia, and Turkey. What they don't know about economic catastrophe isn't worth learning. What they can contribute to solving the crisis is debatable.

Such international meetings are like the crowded theater in which one should not yell "Fire!" The problem with this theater is that it's been filled with bankers and bureaucrats, every one of them yelling "Fire!" all at once.

Luxury hotels in Washington had filled up days ahead of the meeting, which may explain how the Federal Reserve, European Central Bank, Bank of England, Bank of Canada, Bank of Sweden and others managed to spring a coordinated half-point interest-rate cut on what remained of credit markets last Wednesday.

Some analysts marveled that there was no leak of what the central bankers were planning -- even though at least a hundred usually chatty officials knew the secret.

Another possibility was that frightened borrowers and lenders had ceased to care. "What if they gave a rate cut and nobody came?" was a pertinent question.

At long last, nobody wants to lend money to people who won't pay it back. Except governments, of course. They are inured to the process of making investments with no prospect of a positive return.

Taking Pounds of Flesh

The great danger in nationalizing banks or any other industry lies in the conversion of financial returns to political profit. For an early example of this risk, consider the sharks who feasted on Richard S. Fuld.

They were not the creditors and shareholders of Lehman Brothers, who have every right to question their former CEO's judgment and integrity. These sharks were the Washington breed, schooling in an oversight committee.

Fuld weakly defended his right to receive and keep his huge executive compensation. Under questioning last week from Chairman Henry Waxman (D-Calif.) and the rest of the House Committee on Oversight and Governmental Reform, Fuld appeared thoughtful, anxious, even remorseful, but never openly defiant.

This was politic, but not educational. Fuld declined the opportunity to tell the tribunes of the people where to go, which might have reminded them and the people that there must be limits to their power.

During the interrogation, Waxman showed a chart of the compensation that Fuld received in the fat years of Lehman's prosperity. By Waxman's reckoning, Fuld received around $500 million worth of salary, bonuses and exercised stock options between 2001 and 2007.

"Is this fair, when the CEO of a company that's bankrupt has made that much money?" Waxman asked. The clear implication was that Waxman thought Fuld ought to give the money back, because he had led Lehman down a garden path to short-term profit and long-term disaster.

Fuld quibbled about the amount, but even $500 million would be trivial compared to the size of Lehman's problems. No matter. Fuld did not reply as he should have. He did not say, "Hell, yes, it was fair, and I deny your right even to ask the question. My pay is between me and the people who paid me. It was annual compensation by contract, and no matter how exorbitant, it was largely linked to the company's success in the years in which it was earned."

If Fuld should give up his compensation because he ran Lehman into the ground, how much of their compensation should Waxman and his colleagues on both sides of the aisle put into the U.S. Treasury -- which is being drained to shore up the mistakes they pushed the banking industry to make? They could even deposit their campaign contributions to offset the contributions taxpayers and lenders are making.

A New Target

Where are the Congressional hearings to put Rep. Barney Frank (D-Mass.), in the hot seat? He should be grilled about his judgment and integrity, along with hundreds of other legislators of both parties who indulged and subsidized home buyers, house builders and mortgage lenders, and started the country down the road to nationalized banking.

Where is the eagerness to make Frank -- chairman of the House Financial Services Committee -- eat his most intemperate words? In 2003, he said: "I want to roll the dice a little bit more in this situation toward subsidized housing." He also said then that Fannie Mae and Freddie Mac, the dice-rollers, were "fundamentally sound."

By that flexible standard, even the federal government is fundamentally sound.